California Is Filling Empty Hotels Up With Homeless

Marriott is making $10 million worth of hotel rooms available to health care workers, funded by their credit card partners Chase and American Express. Hilton has a similar initiative funded by American Express. These efforts both do good, and provide revenue to hotels, during the most challenging period for property owners ever.

Another source of hotel revenue is sheltering the homeless, and quarantining others without a place to stay during the coronavirus crisis. In my home town of Austin the city leased the Crowne Plaza to house people who didn’t have a place to safely self-quarantine.

California has a major initiative to support vulnerable populations at risk of coronavirus. Homeless shelters are the opposite of social distancing, and you can’t easily wash your hands often living on the street.

It presents a challenge as public health authorities attempt to stop the spread of the virus, not only within communities but across communities as well. In other words, it’s as much a social service for the non-homeless as for the homeless themselves.

  • So far the state has procured over 8000 of a planned 15,000 hotel rooms for those who are “homeless and particularly susceptible to or exhibiting symptoms of coronavirus infection” and about 1800 of the rooms are currently occupied.

  • 75% of the cost is borne by FEMA, the other 25% by local counties. (The state has distributed $150 million to counties so far to assist the homeless during the coronavirus crisis.)

  • This doesn’t count rooms being sourced at the county level. For instance San Diego contracted for 1300 rooms themselves, and Los Angeles over 1000 rooms.

  • Some of the properties are Comfort Inns and Radissons, though small independent hotels make up the bulk of inventory because they’re more likely to be located near homeless shelters.

Since it’s a government program, they’re not getting a great deal on room rates. In fact it’s insane how much they’re paying more than federal government hotel rates during normal times when hotels are completely empty, and these are rates that the lowest-end accommodations joining the program aren’t likely to see in the best of times.

Rooms are being booked for 60-90 days at a time. Hotels are also eligible for “additional reimbursement for higher insurance rates and associated costs.” This isn’t because the rate is meant to cover damage, either, because they’ll also “pay for any property damage incurred.”

It’s always presented challenges when a hotel leases rooms or floors to house the homeless while continuing to sell rooms to their usual guests. But government programs can pay well and that’s tempted New York-area (and JFK airport) hotels especially.

Now that hotels are empty it’s business, and it’s helping make mortgage payments.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I live in CA and the homeless population has mushroomed out of control. For those people who think it’s due to the cost of living, it’s more than that. It’s drug use, mental illness and a strange sense of being disaffected.

    Having a relative who prefers to live on the street, I can attest that a great majority view it as a choice and some sort of weird subculture. No rules, drugs and a perverse sense of community. Whenever a tiny house community gets set up for groups of homeless to use, it gets trashed. They don’t care, follow no rules. I feel badly for those hotels and the condition they will inevitably become. I hope the rates they’re getting reimbursed cover their repair expenses.

    While Gavin Newsom has done a good job in some aspects of managing CA during this crisis, his policies on (pre COVID) homeless are way off and help spur them on. When I was young if you loitered, did drugs or pooped on the street you’d go to jail.

  2. @SS, good points but according to the post, the properties don’t need room rates to cover the rooms being destroyed. Taxpayers will cover that above and beyond the room rates; sky is the limit.

  3. SS you are soooo correct with the homeless subculture. ANd it keeps getting worse and governments in large Liberal states (calif etc) keep giving them more an more resources to TRASH!!! The pooper scooper patrol in San Fran gets paid $187,000 a year to deal with the mess and there is an APP for it.

  4. Good luck getting them to leave when this is over. Especially in CA. Also can’t IMAGINE what the condition of the rooms will be. R they going to evict when the rooms just turn into squalid drug dens?

  5. “SS you are soooo correct with the homeless subculture. ANd it keeps getting worse and governments in large Liberal states (calif etc) keep giving them more an more resources to TRASH!!!”

    Would you prefer a person on the street potentially spreading COVID-19 to up to 50 or even 100 people daily? Or would you prefer that person housed in a room with a television and running water?

    Might want to calculate the cost to society … even at overpriced contracted daily rates it is infinitely cheaper during a global pandemic to keep a person in a hotel room (or 500 or even 2500) than on the streets. By the way, it also helps to keep the hotel employees and support staff in their jobs.

    And by the way, thanks to earlier intervention by the governor California has 1/19th the number of cases that New York has and 1/16th the number of hospitalizations.

    California was the world’s fifth-largest economy with a population of over 40 million people before the crisis began.

    But yeah, try explaining all that to an Internet troll… the troll’s head would explode.

  6. I do not want to stay in a hotel room until it has been fumigated and kept vacant for 2 weeks before being placed back in service.

  7. @Steven M “California was the world’s fifth-largest economy with a population of over 40 million people before the crisis began.”

    And yet it also leads the United States in homeless population even with all of your ultra-liberal local governements. Seems to be working just peachy.

  8. Sure, a place the homeless can self-isolate is great, as long as they don’t need to leave their room. Are they being provided food as well? Otherwise, I imagine they have to leave their room every day so they can eat.

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